Brazil, Colombia may be upgraded by summer-Moody's

Moody's will decide whether to raise Brazil and Colombia's credit ratings before summer, while Peru is on a "steady path" for more upgrades in the next few years, analyst Patrick Esteruelas said on Thursday.

Brazil and Colombia both have a positive rating outlook from Moody's, and an upgrade would put Colombia in the coveted group of countries with an investment grade status.

Brazil's upgrade from its Baa3 rating will depend on the new government's ability to reverse a "spending binge" by former President Luiz Inacio Lula da Silva in 2010, Esteruelas said.

"Brazil suddenly has been emitting positive (fiscal) signals since the inauguration of (President Dilma) Rousseff," Esteruelas said in an event organized by the Andean-American associations in New York.

"But the jury is still out over the government willingness and capacity to implement this year's budget," he said.

Brazil last week announced a 50 billion reais ($30 billion) spending cut to its 2011 budget, as part of an effort to curb inflation.

Esteruelas said Moody's is "bullish" on Colombia's ability to address the obstacles to faster economic growth.

Unlike in Brazil and Peru, Colombia's economy has been growing at a more modest pace since Venezuela curbed imports from its neighbor, forcing Colombian exporters to look for alternative markets.

Peru, although currently with a stable rating outlook by Moody's, is on track for future upgrades due to its strong economic growth and responsible fiscal management, the analyst said.

Key for such upgrades will be the country's ability to improve the economic condition of its population in order to prevent the ascension of populist, anti-market candidates in this year's presidential elections.